The financial crisis compelled banks to reduce their leverage sharply. Consider the following two views of the balance sheet of a bank before and after the financial crisis. Bank Balance Sheet: View 1 (in millions) Assets Liabilities. Reserves $30 Loans $820 Securities $150 Deposits $800 Other borrowed funds $90 Bank capital $110 View 2 View 11 Bank Balance Sheet: View 2 (in millions) Assets Liabilities Reserves $30 Loans $820 Securities $150 Deposits $200 Other borrowed funds $600: Bank capital $99 Calculate the leverage ratios for each view. Instructions: Enter your responses rounded to two decimal places. View 1: Leverage ratio= View 2: Leverage ratio= Which balance sheet view is more likely to be that of the bank after the financial crisis? Evaluate the following statement: The Treaty of Maastricht helped solve the time consistency problem in monetary policy but not fiscal policy. The time consistency problem for monetary policy was addressed by establishing a highly independent This resulted from features such as: Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. long terms for the Executive Board 7 reappointment of members of the Executive Board ? irreversible policy decisions 7 treaty modification for ECB structure change 2 treaty modification for change from economic growth mandate central bank. Perhaps more important, fiscal well-being their banking systems. The Treaty lacked credible ways to ensure good fiscal performance in each country was undermined by unforeseen risks, such as the need in several countries to [recaptialize What are the goals of the ECB? The primary goal of the ECB is to maintain [price stability which the ECB defines as inflation of close to but not over 2 percent How are its officials held accountable for meeting them? Like the Federal Reserve, the ECB is held accountable through: Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. 7 explanatory statements following meetings 7 release of target interest rate 7 regular reports to European Parliament ? publication of target unemployment rate. Do you think the FOMC has an easier or a harder time agreeing on monetary policy than the Governing Council of the ECB? The FOMC will have a harder time agreeing on monetary policy. The FOMC will have an easier time agreeing on monetary policy. Why? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. The presence of national biases may make agreement among members of the Governing Council of the ECB more difficult. 7 Fewer members are likely to have an easier time coming to a decision than a larger group. 7 The FMOC has very little regional bias 7 The Governing Council of the ECB has very little regional bias ? The presence of national biases may make agreement among members of the FMOC more difficult. In what ways are the communication strategies of the Federal Reserve and the European Central Bank similar? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. Disseminate data and research ? Give public speeches 7 Publish transcripts of its meetings ? Hold periodic press conferences Report periodically to a democratically elected body 7 Release an account of their policy meetings after a short period ? Make public the votes In Individual votes of the members of the policy-making committee ? Immediately release the target interest rate following policy meetings